Microsoft has reported a 1.8% rise in quarterly profit but said it was lowering its outlook for the full year because of fears of a 'continued economic slowdown.'
The world's biggest software company reported net profit in the first quarter of its 2008-09 fiscal year of $4.37 billion, or 48 cents a share, slightly above analysts' expectations of 47 cents a share.
Revenue during the quarter which ended on September 30 was $15.06 billion, a 9% increase over a year ago and better than the expected $14.78 billion, the company said.
'In a challenging economic environment, the first-quarter results exhibit the strength and diversity of our business model,' said chief financial officer Chris Liddell.
But Microsoft said the weak economy would have an impact on its earnings.
'Microsoft's business outlook reflects a balance of risks and the likelihood of a continued economic slowdown," the statement said.
'The trends seen late in the first quarter are now forecasted to continue, whereas previous expectations were for the economy to improve in the second half of the fiscal year,' it said.
Microsoft said it expected revenue for the full fiscal year ending June 30, 2009 of $64.9 billion to $66.4 billion, down from the previously forecast $67.3 billion to $68.1 billion. It said earnings per share were expected to be in the range of $2-2.10 a share, down from $2.12-2.18 a share.
The software giant said it expected 'significant volatility' in demand for personal computers, forecasting growth of 10-12% in the second quarter and 8-12% for the year.
Liddell said he expects relatively good sales over the upcoming Christmas holiday period. Microsoft said a decline in revenue from sales of video games and video game consoles in the first quarter was due to figures skewed by the release of the hot-selling Halo 3 a year ago.
'The expected decline, due to the comparison to the quarter a year ago that included the launch of Halo 3, was milder than expected due to stronger-than-expected Xbox 360 console sales,' the company said.
It added that entertainment devices division revenue declined by 6% to $1.8 billion but exceeded the company's highest guidance. Microsoft sold 2.2 million Xbox 360 consoles, representing over 20% growth, as retailers stocked inventory ahead of the holiday season.
